Council Update: Budget, Flyers, Wanderer’s Ground Stadium

Budget: The most important bit of business that Council dealt with on Tuesday was the 2018/2019 budget. HRM’s budget is obviously more complex than a household’s, but some of the basic questions and decisions are the same: How much money is coming in and does that pay the bills? If not, can we raise more money or cut expenses? What balance do we strike between the two? How much should we pay upfront for larger items versus saving for them or taking on debt? How aggressive should we be in paying down the debt? What about saving for the future?

After going through the options list at the end of March, the 2018/2019 budget was already pretty much set. The total budget is $760.6 million, which includes $128.6 million in capital expenditures.

While the other levels of government have been piling on debt, HRM has actually been steadily paying down the municipal mortgage. Debt has fallen by 30% since amalgamation 21 years ago, which means that less and less money is going to interest payments. HRM has the fiscal room to take advantage of opportunities if we want to borrrow.

HRM also has a healthy reserve balance. The total balance is a moving target because there is always money coming in and out. As of the budget presentation, money stashed away in savings totaled $103.8 million.

Budget Pressures: While the municipality’s book are in good shape, there are still challenges to tackle. This year, the wage increases in police and fire that were set through arbitration proved to be a significant pressure that derailed HRM’s original budget projections. Increased staffing to ensure there are four firefighters on a responding truck (a needed change) is also a cost driver. Total fire and police costs have grown by 13%.

Outside of police and fire costs, the other big pressure is the flat commercial market. After years of growth, rising vacancy rates have halted increases in commercial assessments. This is problematic for HRM because commercial property taxes account for a significant portion of overall revenue. Given past cycles in the real estate market, a quick turnaround seems improbable. HRM is likely going to face challenges on the commercial side for the next several years.

The Tax Increase: The main discussion point in Council’s final budget debate was how much to raise taxes by. Tax increases are never popular, but taxes are what pays for services. HRM held the line on taxes, actually reducing rates to offset rises in assessments, in three of the last five years, but there are limits on what the municipality can absorb without cutting services. Council voted to increase the bill that the average residential house ($234,500) pays by 1.975%. Costs for the average home from $1,880 to $1,917. 1.975% is below the projections for inflation (2.0%) and below projections for wage growth in HRM (2.5%). To me, it’s a reasonable number.

Council did have a vigorous debate about whether to reduce that increase from 1.975% to the 1.6% increase projected last year by drawing upon the unexpected 2017/2018 surplus. It was a vigorous discussion and the motion to reduce the increase to 1.6% failed on an 8-8 tie. I voted to keep the increase at 1.975% and did so for several reasons.

1. The 2017/2018 surplus is largely the result of better than expected deed transfer tax revenues from the sale of several large apartment buildings in Highfield Park. It’s a one-time windfall that is unlikely to reoccur in 2018/2019.
2. I don’t expect the commercial market will get any better so HRM’s budget will remain under pressure on that front.
3. There will be continued cost pressures in 2019/2020. Police and fire bills will continue to rise, the Alderney ferry hours may again be up for discussion, there are a number of other labour contracts in negotiations, a review of recreation fees is underway, the convention centre account will need several million to top it up.
4. There is a need for capital spending as HRM tries to deliver on strategic initiatives like the Integrated Mobility Plan. The CAO indicates there is an unfunded capital amount of up to $80,000,000. Council will be doing a deep dive into the long-term capital plan later this year.
5. HRM needs to be ready to come up with our share of capital money to take advantage of the recently announced federal-provincial infrastructure program. There is no federal or provincial cash unless HRM comes up with its share.
6. This year’s budget already relies on the 2017/2018 surplus to fund just over $1,000,000 in approved extras from the options list, including extended hours on the Alderney Ferry and the Lake Banook pollution study. We shouldn’t overextend that reliance.
7. The $15,000,000 surplus sounds like a lot of money, but it’s really just 2% of the overall budget.

Given the pressures, the one-time nature of the surplus, that we’re already dedicating some funds for this year’s budget to the surplus and everything that HRM is trying to do in terms of capital, I think topping up the savings account with the surplus’s one-time funds was the prudent course. I didn’t want to see us potentially setting up a scenario where HRM is stuck facing an unreasonable tax increase or making unnecessary cuts in 2019/2020 because we drew down our savings by a bit too much in 2018/2019. The budget passed with 15-2 with Councillors Cleary and Outhit voting against.

Flyers: Moving from budget to the main Council agenda, the item that attracted the most attention was flyers. While some residents love being able to browse through what’s on sale in paper form, many object to the mess that results from the, at times, haphazard delivery. It seems to be a regular ritual for many to fish flyers out of flowerbeds and find hidden bundles under melting snow.

Study has shown that the environmental footprint of flyers is considerable. Participants in a 2017 Ecology Action Centre study collected and weighed their mail and over a twelve month period, mailboxes without a “no flyer” sticker collected an average of 26 pounds of junk mail. Of that total, flyers consistently made up 3-4 pounds. Not every door received a free non-subscription newspaper, but the one that did produced a hefty 63 pounds. Adding it all up and extrapolating across HRM makes for a lot of paper.

Finally, flyers also create costs for HRM since all that paper has to be collected, sorted, and recycled.

Council has looked at the flyer issue in the past, particularly the possibility of making flyers something that people have to opt-in to receive versus the current practice where everyone gets them unless they opt-out. The consistent advice from staff is that an opt-in system would violate the Charter of Rights and Freedoms provisions around freedom of expression. Limitations on freedom of expression are legally permitted if there is a clear public policy rationale and if the infringement is minimized as much as possible. Given how integral flyers are to the Herald’s bottom line, an opt-in provision would almost certainly be challenged in court and it would be very difficult for the municipality to defend that limitation as minimal.

So what can we do? While a ban or opt-in provision would be unconstitutional, a bylaw setting expectations and standards around delivery is within Council’s power. Calgary and Ottawa have already gone this route, enacting bylaws that set standards and, notably, prohibit delivery to addresses with no junk mail signs. The requirements in the Calgary and Ottawa bylaws largely mirror the industry’s voluntary code of practices. The advantage of a bylaw is it turns a voluntary code into a law that has consequences if broken. Staff will now prepare a bylaw and return to Council in the future.

If paper flyers are something that you’re not interested in or if you read your flyers online, you can cancel paper delivery by calling (902)426-3031

Wanderer’s Ground Pop-up Stadium: The proposed temporary soccer stadium for the Wanderer’s Ground at the corner of Sackville and Summer Streets is moving closer to reality. Back in June, Council approved staff negotiating a three-year rental agreement for the Wanderer’s Grounds. Since then, plans to launch the Canadian Premier Soccer league have been delayed. The league is now looking to launch in spring 2019. As a result, Council rescinded June’s motion to change the dates and clarify some additional terms.

The current plan is for HRM and SEA to enter into a one-year rental agreement for 2018. SEA would be allowed to host eight ticketed events in a temporary stadium with seating for 6,500 in 2018 and the temporary stadium would be dismantled at the end of the 2018 season. If there are no show stoppers from the 2018 test year, HRM and SEA would then enter into a three-year agreement for 2019-2021 for the launch of the CPS league and an expected Halifax team. As I wrote back in June, I’m excited to see what comes of this proposal that would put a right-sized sporting venue right in the urban core and that also has no request for public funding.

Other:

• Deferred giving staff direction on proposed naming rights for the Sportsplex pending additional information (in camera due to contractual nature so I can’t say more than that).
• Accepted a request by the owner of 51 Sandy Point Road to have her property excluded from the local improvement charge for paving the road (a complicated back story).
• Amended the encroachments bylaw to reduce the number of routine requests that need to be approved by Council.
• Provided a noise bylaw exemption to Glen Arbour Golf Course so that they can continue to host weddings (this happens every year).
• Authorized community grants from the LWF Ratepayers fund in the Fall River area.
• Entered into less than market value leases for municipal lands that are being used by canoe and rowing clubs (Kinap, North Star, Orenda).
• Requested staff reports on adopting municipal rules around cannabis (Province is leaving a lot of up to municipalities) and on the cost of extending sewer and water to Harrietsfield.
• Approved an additional exemption to the Regional Plan’s stipulations against developing lots on private roads in Musquodoboit Harbour.